Date: 14 February, 2024
Key Points:
- Citi announces a successful blockchain proof of concept for Tokenization of Private Fund on the Avalanche blockchain.
- The tokenized fund from Wellington Management was tested with collaboration from WisdomTree and ABN Amro.
- Citi explores efficiencies in the $10 trillion private fund asset class using smart contracts for fund distribution rules and identity credentials.
- Tokenized funds used as collateral for an automated lending contract with DTCC Digital Assets.
- Nisha Surendran, Citi Digital Assets’ Emerging Solutions Lead, emphasizes the role of smart contracts in enhancing rule-enforcement at the infrastructure level.
- ABN Amro is a traditional investor requesting tokenization, transferring tokens to hypothetical WisdomTree clients.
- The test, executed on the Avalanche Spruce testnet, involves Tokeny in developing the ERC-3543 tokenization standard and aiding with identity aspects.
- Citi’s prior experience with Avalanche includes a successful FX solution trial in collaboration with T.Rowe Price and Fidelity International.
- The proof-of-concept demonstrates the potential for smart contracts to enhance automation, compliance, and controls for investors and issuers.
- Nisha Surendran highlights the broader goal of exploring new operating models and creating market efficiencies through tokenizing private assets.
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Today, Citi announced the successful execution of its latest blockchain proof of concept involving the Tokenization of Private Fund within the Avalanche blockchain ecosystem. The tokenized fund, belonging to Wellington Management, underwent testing in collaboration with WisdomTree and ABN Amro.
Private fund tokenization, a $10 trillion asset class with manual and less standardized processes, is gaining attention, and Citi’s latest initiative aims to explore the potential efficiencies within this space. Smart contracts were used to encode fund distribution rules, along with features such as identity credentials and utilizing the fund token as collateral for an automated lending contract with DTCC Digital Assets.
Nisha Surendran, Emerging Solutions Lead for Citi Digital Assets, highlighted the benefits of smart contracts and blockchain technology in enhancing rule-enforcement at an infrastructure level. The proof of concept involved ABN Amro acting as a traditional investor requesting tokenization, with the tokens transferred to hypothetical WisdomTree clients.
Executed on the Avalanche Spruce testnet, a permissioned subnet with institutional validators, the test further demonstrated Citi’s exploration of blockchain capabilities. Tokenization firm Tokeny was involved in developing the ERC-3543 tokenization standard and assisting with identity aspects.
This isn’t Citi’s first foray into Avalanche, as it previously trialed an FX solution with T.Rowe Price and Fidelity International as part of Singapore’s Project Guardian tokenization trials. The recent test by Citi showcased end-to-end token transfers, secondary transfers for trading, and highlighted new capabilities through collateralized lending.
The proof-of-concept demonstrated the potential for smart contracts to enable greater automation, enhanced compliance, and controls for investors and issuers, as stated in the press release. Nisha Surendran emphasized the goal of exploring new operating models and creating efficiencies for the broader market through the tokenization of private assets.
References:
https://www.ledgerinsights.com/draft-digital-euro-legislation-supports-permissionless-blockchains/
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